The Toronto Transit Commission has received $300 million from the federal government that will be used to green its bus fleet with the purchase of nearly 700 new hybrid buses.

Transport Minister Lawrence Cannon made the cash announcement at the Malvern bus garage in Scarborough on Tuesday. The funding was originally promised in 2004 by the former Liberal government.

The money, part of a $1-billion deal in which Ottawa, Toronto and the Ontario government are equal partners, will also be used for subway and streetcar infrastructure improvements in Toronto.

The diesel-electric hybrid buses cost more than $700,000 each, about $200,000 more than diesel buses. The hybrids produce 37 per cent fewer greenhouse gas emissions and use 20 to 30 per cent less fuel.

"It's very good news for Toronto and Torontonians -- I'm very pleased," Mayor David Miller said on Tuesday.

"We've chosen to prioritize public transit. We're using the funding entirely for public transit, and what this will do will make Toronto the leader in green bus fleets in Canada and have the second-largest hybrid bus fleet in the world."

The first shipment of the energy-efficient buses arrived in December. The hybrids will hit the road as diesel buses are phased out.

With a report from CTV Toronto's Alicia Kay-Markson